Accepting an “agent fee” for advisory services under the Paycheck Protection Program (PPP) of the CARES Act does not in and of itself impair independence
The intent of Congress, Treasury and the SBA was to create simplicity for borrowers and inject much-needed funding into the economy as quickly as possible. Congress determined that using the SBA and lending institutions, which had mechanisms already in place, was the most effective means to achieve this goal. There was no intent to create challenges or penalties for those assisting borrowers. Indeed, utilizing the services of accountants is beneficial for both expediting the process and increasing the reliability of the information provided by applicants.
While the AICPA understands that a fee paid by a lender is referred to as an “agent fee,” we don’t believe this should be an impediment to allowing CPAs to fulfill the intent of the CARES Act. Rather, the AICPA’s Professional Ethics Executive Committee (PEEC) believes members may advise and assist their attest clients in understanding the information required to be submitted and in the determination of amounts to be included on the application, provided the member does not prepare or sign the application form itself or perform other management responsibilities on behalf of the applicant.
We further believe that, considering substance over form, the fee paid by lenders is not a contingent fee. The amount of the loan is an objective mathematical calculation (based on payroll) with the amount of the fee set by the CARES Act. In addition, it is Congress’s intent that all loans will be funded, so there is no need for any advocacy by anyone assisting the attest client to convince the lender to make the loan.
In summary, a CPA may advise and assist his or her attest client in gathering information for the attest client to prepare and submit the loan application to the lender without impairing independence. Additionally, if the lender pays the CPA an “agent fee” for that service, the CPA is not, simply by nature of receiving the fee, an agent – nor does receipt of the fee constitute a contingent fee.
This position of the AICPA’s Professional Ethics Executive Committee (PEEC) is based on which services you actually perform. We believe that simply advising or assisting attest clients in understanding the information gathering and lending application process is not performing management responsibilities for purposes of applying the AICPA Code of Professional Conduct as long as you do not, in fact, assume management responsibilities. This is true even if the lender pays an agent fee.